East African Presidents Support Launch of Regional Exchange

Kenya’s President Uhuru Kenyatta, Tony O. Elumelu and Emmanuel Hategeka, Rwanda’s Permanent Secretary of the Ministry of Trade and Industry, at the launch of the East African Exchange in Kigali.

Tim Newbold

A new commodities exchange that launched late last week in Kigali, Rwanda, aims to use state-of-the-art technology to provide East Africa’s small-scale farmers access to agricultural and financial markets.

WSJ Frontiers Newsletter

The East African Exchange’s backers hope the system will enable farmers to achieve competitive pricing for their crops, as well as getting access to financial services that will help them better manage their businesses.

The exchange has been in operation for several months, but it was launched officially at a ceremony last Thursday in Kigali, Rwanda, attended by Presidents Paul Kagame of Rwanda, Uhuru Kenyatta of Kenya, Salva Kiir of South Sudan and Yoweri Museveni of Uganda.

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A South Sudanese farmer carries produce from her farm across a river.

Agence France-Presse/Getty Images

In an interview with WSJ Frontiers, Jendayi Frazer, the chairman of the East African Exchange (EAX) and a former U.S. Ambassador to South Africa, explained that one of the primary benefits of the exchange would be that it provides more transparency for farmers in the region. “Farmers will have clear view of what prices are,” she said. With an accurate, real-time knowledge of the selling prices of their crops, farmers will be better able to choose when to put their products on the market.

The exchange should also encourage intra-regional cross-border trade, development of which is seen by many analysts a key driver of Africa’s economic development. Dr. Frazer added: “The EAX has the capacity to facilitate cross border trading of commodities within the [East African Community], providing a central marketplace, connecting buyers and sellers throughout the region.”

One of the exchange’s co-backers, Tony Elumelu, chairman of Nigeria-based pan-African investment group Heirs Holdings, expressed the exchange’s mission in grander terms: “If we want to forever consign to the archives of history the images of donor aircraft landing in Africa to save our starving, huddled fellow Africans [we must] grow more food, increase access to markets and get better and more stable prices for our farmers.”

Mr. Elumelu believes that creating transparent, efficient exchanges is a crucial step in transforming the role agriculture plays on the continent. “Africa must [treat] agriculture as a business sector that generates jobs, tax revenues and commercial value, and not as a government welfare program,” he added.

Tea pluckers work at a tea farm near the foot of Mount Kenya.

European Pressphoto Agency

Initial response to the new exchange from farmers has been enthusiastic. According to figures released by EAX, in Rwanda alone 28 cooperatives with 600 members each—a total of 16,800 farmers—have signed on to use the exchange. But while the project is going well, Dr. Frazer cautioned that the ultimate success of the exchange “relies on long term, patient capital and strong partnerships with local and political leaders.”

A key element of the exchange’s strategy is to provide farmers with certified warehouses to store their products. With effective management of the “warehouses to ensure you maintain the quality and quantity of products that come in, you can increase the grade of the products, which can increase the returns for the farmers,” Dr. Frazer noted.

The presence of several of the region’s presidents at the launch of EAX is symptomatic of the importance the region’s leaders are placing on both development of agriculture and promoting cross-border trade, Dr. Frazer noted. “The presidents of Kenya, Rwanda and Uganda are essentially making the EAX one of the projects for fast-tracking regional economic integration,” she said.